Published by MarketWatch.

By Thomas Kostigen, MarketWatch
Last Update: 12:03 AM ET Sep 14, 2007

SANTA MONICA, Calif. (MarketWatch) — Warren Buffett has been selling off his position in PetroChina over the past few months, something both his shareholders and political activists are happy about.

It isn’t often that political activists get joy from an investor making money and cashing in on a company that has ties to genocide, but Buffett’s sale amounts to Sudanese divestment, activists say, and that is something to cheer — or so they spin. Financial analysts say Buffett is merely taking profits.

PetroChina is a Chinese petroleum company that has affiliated operations in Sudan, whose government is accused of committing widespread genocide in its Darfur region. Supporting PetroChina with investments, activists say, supports the Sudanese government in Khartoum.

Since July, Buffett has been reducing the stake Berkshire Hathaway, his holding company, has in PetroChina. Berkshire is PetroChina’s largest foreign shareholder.

PetroChina’s stock has risen steadily over the past six months and Buffett’s sale in July seems timely; that is when the stock hit its 52-week high. (Although, it took some time for this to become news as Berkshire mailed in its filing notice of shares sold rather than sending notice electronically, as is common.)

In any event, Buffett’s sale came after a resolution was filed by a female shareholder last spring requesting Berkshire withdraw its position in PetroChina because of the ties to Sudan. The proposal wanted to “prohibit Berkshire Hathaway Inc. from holding securities such as PetroChina Ltd.” because of “the continued violations of human rights and international humanitarian law in Sudan’s Darfur region and, in particular, the continuation of violence against civilians and sexual violence against women and girls.”

Then, Buffett politely declined and disagreed with the proposal’s position. “The proposal objects to Berkshire’s investment in PetroChina because of the atrocities that are occurring in Sudan. Berkshire agrees that conditions in that country are deplorable and sympathizes with the proposer’s desire to remedy them. We believe, however, that she is wrong in both her analysis of PetroChina’s connection to these conditions and her belief that our divesting our PetroChina holdings would in any way have a beneficial effect on Sudanese behavior,” he wrote.

Profit motive?

Of course, activist groups such as the Sudanese Divestment Task Force were none too pleased with Buffett’s position then. Now, however, they are heartened.

“We are encouraged by the news of Berkshire Hathaway’s sale of 92 million shares worth $140 million of PetroChina, the worst of the four major oil companies funding the genocide in Darfur, Sudan. Since July 11, Berkshire Hathaway has sold over 279 millions shares of PetroChina. Since Berkshire Hathaway is still the largest single shareholder of PetroChina, it continues to have a unique opportunity to influence PetroChina to help stop the genocide in Darfur. We hope that these sales send a clear signal to PetroChina, the government of China and the government of Sudan that large investors, like Mr. Buffett, and hundreds of thousands of small investors, do not want their money to be complicit in genocide. Americans want their investments to be genocide-free and American financial institutions should respond accordingly. There are many opportunities in the global market for good investments with excellent returns without investing in genocide,” says Eric Cohen, chairman of Investors Against Genocide, an activist group.

There was no comment from Berkshire on its recent spate of sales.

Reuters, in a news report on the most recent sale, quoted numerous analysts, money managers and financial observers who claim the sale was likely more one of a “prudent trade in an overvalued market” as one person noted, than an act of political correctness. Indeed, despite the sale Berkshire is still the largest foreign shareholder in PetroChina.

I don’t think Buffett has sold shares based on politics. But I also don’t believe the politics of his stock sales have escaped him either. It would be nice, however, if he came out and said so. He is a loud voice in a world that has largely been silent on the atrocities committed in Darfur.

This week the Sudanese government launched air strikes and resumed fighting in the Darfur region. More than 200,000 people have been killed over the past four years there, and millions more have been displaced.